The £4 billion opportunity in grocery

Opportunity for improvement is everywhere, even within the world’s top organisations. In grocery, I believe there is over £4 billion of opportunity that could be quickly delivered to the benefit of customers and companies if the right approach is applied.

Why does this opportunity exist?

If you take the grocery supply chain, whether it’s waste on the production line, waste in store, an operator stood by a paused packing machine, a lorry that isn’t quite full, the gaps of unavailable produce in a store; all these opportunities are part of a broader, connected story. People often rely heavily – particularly in such a visual sector like grocery – on what they see and hear without understanding how it fits together as part of the bigger picture. We’re programmed to operate like that; to relentlessly focus on what we see and the bit we’re responsible for. But what we perceive to be true isn’t necessarily representative and probably wouldn’t match up to a robust assessment of the facts. You wouldn’t carry out an opinion poll and only ask one person. Even if something perceived is true, it can quickly become too high a priority when the facts are saying there are other more valuable areas to work on.

By taking complex operational data and translating it in a practical, physical way across a company from the bottom to the top, one of the UK’s largest organisations in the sector was recently able to rework their processes and save over £100 million while increasing sales. Even organisations like Nissan Sunderland, the most efficient car plant in Europe, in what is arguably the most efficient sector in the world, achieved a 20% increase in output in six weeks in one of its major sub-assembly lines by taking this approach.

It’s relatively easy to go into a multi-billion-pound organisation and identify hundreds of millions of pounds of opportunity, but it’s less easy to turn that into real money that the customer, the organisation, and the staff benefits from.

Results occur by bridging the gap between where data-driven information doesn’t match the experience of the people within a business. In a buying team for example, you’ve got years of relationship history and understanding markets and you’ve also got literally billions of data points built up across every product bought and sold. It’s easier to use experience and gut feel than it is to find the right answer in millions of data points. It’s easy to dismiss data as manipulable and unwieldy. It is hard to use well. Once this data is gathered, understood and used, however, fantastic results can be achieved. It’s a different approach that delivers tens of millions of pounds-worth of value. People at all levels of organisations love learning how to do this well and seeing the results.

This approach works particularly well in a complex sector like grocery. That’s why the £4 billion estimation is probably quite a conservative figure. We're so confident in the results this approach achieves, that when we partner with companies, we put all our fees at risk against delivering financial value.

We find the most depressing and often unsuccessful organisations are the ones that believe they’re doing everything as well as they possibly could be. The best companies, the ones who innovate and work to create impactful legacies, continuously question how they could be better.

Andrew Hawes is a Founder and Director at Newton Europe, specialising in grocery.